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« A Vergence in the 4s UPDATED 3/20 | Main | Party Like it is 1938 »

Monday, March 23, 2009

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Wave Rust

This is how i saw the 1st leg down. its not impulsed. its a correction but it will take years to prove it :)

http://i478.photobucket.com/albums/rr146/Wave_Rust/dow3s.jpg


wave rust

dlu

Yelnick,
Neely and Prechter is basically a Story about a Hare(Neely) and Tortoise(Prechter). you know who wins in the end? The tortoise(Prechter). Rest is noise.

Mamma Boom Boom

OUCH! Is my camp starting to get crowded, already?

Ned

DG

Yelnick,

It wasn't that the move was stronger, it's that it wasn't faster. Rich S and I debated what this might mean on the "vergence" thread.

Robert Murdoch

Assuming the SPX and DJIA pullback to roughly 766 and 7258, respectively, is that in the context of wave 1 of [2] or is that wave 2 of [2]?

I was under the impression that a wave [2] consists of 3 A-up, B-down, C-up moves. So are there 3 waves or 5 waves in a wave [2]?

It appears that there are 5, given that a wave 4 move is referred to above.

Canadian Money

Yelnick,

The March 6th wave count from EWI shows wave 3 of 5 ending at the low on March 6th. (I have a copy dated from your blog March 9th or elsewhere).

Has EWI changed their most likely count? Do they now see their 3 of 5 being 5 of 5?

CM

Robert Murdoch

I am just a novice, but according to today's blog, it appears to me that EWI says that wave [2] is underway. This would mean that wave 5 of wave [1] is over.

Robert Murdoch

It appears to me, based on the comment above in the blog, that EWI says we are in wave 1 of [2]. Consequently, wave 5 of [1] is over.

Robert Murdoch

Excuse the double post. I didn't see my 1st attempt going through.

da bear

hmm, i looked at the March issue EWFF and then they had the market in the last wave 5 down. guess they changed counts then changed back...

It looks like the 1938 bottom. but I would suspect the rally would be more like 1930. Prechter is expecting a 3 wave advance off the lows correct?


da bear

Wake up and smell the tulips.

George Soros

Bear market is over. We are in a 3 of 1. 2000-2009 was an abc

Genesis

80% down from here; within two fortnights.

The Boy Who Cried Wolf

I totally agree, Genesis, only I think 100% down from here within a half-a-fortnight. Keep up the great work with your forecasts!

yelnick

da bear, Prechter has changed from wave 5 down to wave [2] up, and expects it to go 50% like we saw in 1930. He sees wave [2] as a three-wave move over several months. The first wave up looks impulsive, which suggests that it is wave 1 of A of [2] of a zigzag (535 pattern). First we have a wave 2 of A of [2] down to the upper trendline, say SP765 level. Then a wave 3 of A up.

q

George Soros

Your count would be the first time an obvious count is correct.
I sincerely doubt it.

yelnick

DG, thanks for the clarification on Neely.

Robert Murdoch, so it is clear: Prechter has the move up since Mar9 to be wave 1. He didn't specify beyond that, but to have [2] break as a three-wave, it should be 1 of A. He expects A to break as a five-wave, which means wave [2] will be a zigzag. This implies a strong move, at least 50%, and maybe 62%.

As with all things in the market, it can fool; so if instead of a wave 2 of A down to SP766, it could jink a little bit and keep going up, making wave 1 break as 7 waves not 5, meaning it is a corrective pattern. Hence a bit of wait and see right now.

yelnick

Canadian Money, not sure where waves 4 and 5 of 5 went! This leaves open that the pattern is still a large wave (4) and this is leg c up. Or, as some have suggested, that the wave down was a three-wave A and we are in B, which has gone irregular (ie wave b of B broke below the end of A).

Steven_737

DG,

regarding your "rule of thumb" that
"In ending diagonals, the 1st wave is
more likely
to be the longest wave, not the 3rd wave"
this "rule of thumb" does not prohibit the count of the ending diagonal at this juncture.

I have not seen a reference in EWP or elsewhere that imposes such a restriction to an ending diagonal.

If there is a reference, I would appreciate your posting it.

Thanks

Steven_737

Upstart

Again, yelnick, waves 4 and 5 of 5 went the same place they did at the end of the decline in 1938. See detailed chart from then. So similar. The truth is that Elliott doesn't always exactly work! If one insists on 4 and 5 being there, then they're there, but very tiny.

DG

Steven 737,

Yes, it is not that the 3rd wave never extends in an ending diagonal, but here is Neely on that pattern (MEW 11-6):

"This (3rd wave extended ending diagonal, which he calls Terminals) constitutes one of the rarest possible wave patterns. When wave 3 extends in a Terminal pattern (unlike all other instances), it cannot be much longer than the first wave. Wave 2 must retrace more than 61.8% of the first wave and the fourth wave should retrace 38.2% (preferably less) of the third wave...The fifth wave should not be more than 61.8% of wave 3. You will probably only see this pattern as the C wave of a sequence, not the 5th wave of an impulse pattern".

As I recall, your 4th wave retraced much more than 38.2% of the third wave, but I might be misremembering.

I haven't read EWP in a while (although I did read it twice) because I tend to trust Neely more, but that's your call to make for your own self, obviously.

Mamma Boom Boom

>>First we have a wave 2 of A of [2] down to the upper trendline, say SP765 level. Then a wave 3 of A up.<<

Makes sense! Near term weakness set in, today. No guarantees!

Ned

BIM

hello everyone

I am new to this blog, and EW counting. This is my first post...
I would appreciate if anyone can post a graph of the new count (changed new count).
Are we pulling back to around SPX 766, and then start going higher.

george

Yves,
your model gave 3 sell signals
in a row for the first time.
has your model turned back
to a buy signal?
it has been pretty accurate
up to now.
george

george

Yelnick,
you stated the other day
that EWI said
the put call figures were
the same as at the previous
several tops.
did they address this when
they changed their wave
count?
george

Yves

George, I will post shortly.My model is on hard sell since the 10th of Feb .The alphier signal got close to a buy but we were missing 10 more down days.Repurchase agreements have broken down and can't seem to push the market back up.M3 is falling fast and is a reflection that pedal to the metal is not working.This wave B is in progress and completing shortly(this is my count in the latest write up).I will show an alternate count with the same end result in direction.If you did look at P/C ratio you know you are not getting a large wave 2 bounce.Don't forget that sometimes the model is perfect on timing and sometimes as a bit of lag.This always give you room to act once you see the signal.
One more drop hard to new lows fit best with what I see in my liquidity indicators.

Yves

Forkoholic Serge

You've got mail : it's 200dSMA Envelope of DOOM.
For some reason we can't pass it. I have no idea why ;-)
http://forkoholic.com/images/spxsmaelv20.jpg

Harry

Yves are you pretty much waiting for alphier to go long?

MHD

Yelnick.... isn't the Fed doing exactly what Bob P. said they couldn't be that stupid to do, in his book CTC? The Feds are replacing their assets with the toxic debt, of which there will be much more to come. Has Bob P. had any comment on the Feds recent moves and does it surprise him?

Yuri

Fools; the lot of you.

This is all nothing more than a sideshow, a distraction. The truth is here:

http://meltdown2011.com/2009/03/24/planet-x-and-2012/#comment-2938

Read the comments below the post in the link I've provided, and click on the link in those posts. Come autumn, we'll all be shown the truth, and it hasn't anything to do with our financial markets.

Prepare, while you still can.

Tom CZ

Natural targets for this wave lie in the area around 1100 on SPX (50-61.8 fibo + 200DMA)

Tom CZ

Yves

Harry, the signal of alphier is one of 20 indicators that is built in my liquidity index .I can easily go long without it as we have done so far but considering those bounce as temporary just like the buy we had in January followed by the sell in May.Alphier is very accurate but is meant for super long term buy signal.Once that kicks in we should be in bull market for years to come.

Yves

yelnick

MHD, yes, Prechter predicted the Fed's moves and has repeated his predictions in the EWT and within Club EWI. I posted his Chapter 13 from his book (with his permission) - the link is here: http://yelnick.typepad.com/files/13_canthefed.pdf

Steven_737

"Fools; the lot of you.

Prepare, while you still can."

HOW?
what do you suggest?
short NASA ?..................!

?..................!

Martin

Dear DG,

With respect to Neely's trading, when he says 1/2 short for example is that $100.00 short per point.
Do you trade Hourly, Daily or Weekly or a bit of each?
Hope you can clarify
Many Thanks
Martin

harry

from Conquer the Crap: "If gold were to move above $400/ounce... I would probably be convinced that a major low had passed." (i.e., that inflation and not deflation were in the cards)

Look, there's a lot of interesting stuff in the chapter you link to, Yelnick, but the fact is that, since the fall, everyone can see the writing on the wall: Let one big institution go under and all the dominoes fall.

They will print money to prevent bank runs. There may be a day or two of national emergency but then the presses roll. An implosion is simply not an acceptable option.

DG

Hi Martin,

Neely generally recommends position sizing by reference to putting 1-2% of your capital "at risk" on a given trade. Let's say you have $100K and you want to trade the S&P 500 e-mini, where each point is $50. If Neely recommends a trade with a 20 point stop from the entry point, you would trade 1 contract ($50/point X 20 potential points lost) if you are putting 1% of your capital at risk. Some who post here will say that you should put more at risk and it is ultimately your decision (I do put more at risk than that, but I also watch just about every tick of the market, so I can pretty quickly hedge my positions if they start to look shaky). Other contracts have different sizing issues due to the different amounts per contract point.

I trade all Neely's timeframes. Sometimes I'll start a trade with an Hourly entry point, but if the stop gets hit and he's in that same trade on the Daily, I will sometimes let it ride. I once let a trade start as an Hourly trade and let it migrate to the Weekly level. It ended up being a losing trade, but the "extra" loss I had to take was minimal and the risk/reward looked good.

Hope that is helpful.

Mamma Boom Boom

[>>First we have a wave 2 of A of [2] down to the upper trendline, say SP765 level. Then a wave 3 of A up.<<
Makes sense! Near term weakness set in, today. No guarantees!]

It appears that the correction is about half completed, already.

Ned

Robert Murdoch

Yelnick:

As a novice to Elliott Wave theory, I am somewhat confused as to where we stand now with the wave count.

I read somewhere today that at 826.78 the SPX filled a gap, so perhaps that is the top of wave 1 of [2].

At today's lows both the SPX and DJIA retraced between a Fibonacci 21.4% and 23.6% of the move off the lows.

Both the SPX and DJIA retraced slightly more than a Fibonacci 61.8% from today's low versus today's high which was the high for the move.

Please weigh in on where you think we stand now.

Martin

Thanks DG,
We are lucky Neely can not move the markets.
You comments were very helpful.

yelnick

Robert Murdoch, start with the big picture. We broke above the upper trendline that connects the wave (2) top on May19 and the wave (4) top on Feb9 (the 2 - 4 line), and have stayed above it since Monday. This strongly suggests a change of trend - the end of the wave [1] down since Oct07 and the start of a multi-month wave [2]. Within [2] we have two primary counts: that 1 of A of [2] ended today and we are in a wave 2 pullback; or that wave 1 of A of [2] ended Mon, wave 2 ended yesterday, and we have just had subwaves [i] and [ii] of wave 3 of A of [2]. If the first count is right, we should see a deeper pullback in wave 2, typically testing the upper trendline (the 2-4 line) and bouncing, or going to the range of the 4th of the prior 3rd, which suggests below the trendlne. That retest of the 2-4 line is not required, and if the second count is right, we should have a pretty strong [iii] of 3 tomorrow and potentially Friday.

Tonight's STU notes that the low point today bounced off a new trendline - the lower trendline of the rise since Mar9, hitting the 2-4 line. (In an up move, the 2-4 line is lower; in a down move, is upper.)

Now, besides the two counts for wave [2] up, there is still a reasonable possibility of two other counts that are more bearish - and more like Neely's count:

1) that we are still in wave (4) of [1], and it is breaking as a flat or triangle
2) that we are still in wave (5) of [1], and this is 2 of (5)

Tne latter count is very bearish, and consistent with put/call sentiment. If we have a deep drop below the upper 2-4 trendline, that count re-emerges as more likely. At the moment the other three counts are more likely, and all have further upside. Over the next two days watch for a strong 3rd of a 3rd move up vs a pullback, which tells us which wave [2] count is on; and over the next week or two, a continued strong move vs meandering, which tells us if wave (4) is still on.

Virginia Jim

Yves, independently based on a lot of market geometry, I've concluded there is one more drop and, at least in NDX, I expect a better test of the Nov 24 low and, possibly, the 2002 low. That's a tough position to take with Hochberg's STU last night declaring w2 underway with a target of DJIA 10,000, with Neely sitting on his hands and Thursday 8am futures positive 87 DJIA and 10 SPX. My timing marks today, March 26, as the high with a quick and furious drop and an equally vicious V bottom.

To be clear, Prechter said on CNBC Monday March 9 that the "minimum requirements" of w5 in DJIA had completed and while he preferred a further drop, he was officially telling subscribers to go neutral. In other words, the likelihood of future downside was not worth the risk of w2 occurring. Regardless of Hochberg's STU (with which Prechter is associated), I have not heard anything from Prechter to change that highly official risk/reward call. There's a big difference between the Prechter risk/reward judgement given EW probabilities and what Hochberg is mandated to do which is give the best read on EW three times a week.

Jim

Virginia Jim

Yelnick, Regarding the much noted comment, "The best 10 day rally since 1938," September 18/19 was the largest two day rally of all time (it might have been the 2nd or 3rd best) and yet it was closely followed by the largest two month point loss in history (I say that and expect I'm safely correct but have not checked). 10 days is (not clearly short covering), however, more persuasive than 2 days (clearly short covering). It will be interesting to see how this resolves. When the perma bears (EWI, Neely et al) flip long, that's near concensus up. How can any market deny that mandate?

Yves

Virginia Jim, good observation.Perma bears are turning bull ,luke warm bulls going crazy bull and trampled perma bulls (DOA).I am putting up a piece soon that will explain what I see.
We cant all get bullish and get it right ?

Yves

Robert Murdoch

Yelnick:

This wave [2] seems to be moving along fairly quickly, particularly if we are already in wave 3. Once wave 4 and 5 of A of [2} concludes, what comes next. Is it a wave B of wave [2], or is wave [2] over, or is it wave [3]?

Mamma Boom Boom

CAN ANYONE PUT AN IMPULSIVE COUNT ON THIS 3 WEEK MOVE?

NED

Virginia Jim

Ned, Daneric is doing an excellent job.

http://1.bp.blogspot.com/_TwUS3GyHKsQ/ScrGr7mBkaI/AAAAAAAAAKU/lo_BAiEFHXQ/s1600-h/30.png

Jim

Sean

Yves, looking forward to your updates.

Canadian Money

My alternative count of a continued drop remains a valid possibility. To date the rally remains well below the extreme limit.

Under this alternative count, the current rally is also a wave 2, just a much smaller wave 2. A smaller wave 2 would also be expected to have the temporary bullish characteristics of a second wave. However, it would be a lot more temporary rally than the larger wave 2 count alternative.

CM

Mamma Boom Boom

Jim,

Yes, he has a count. But it doesn't look proper, to me.

Ned

Mamma Boom Boom

We should start to see some valid symmetry to this thingy.

Ned

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